Exam 17: The Impact of Deregulation and Regulation on Financial Institutions and Banking Industry in the United States

Which of the following federal laws permitted financial-service providers to form financial holding companies (FHCs) offering banking, insurance, securities and other services under one controlling corporation and limited the sharing of private consumer data?

Investment companies are regulated mainly by the Securities and Exchange Commission (SEC) in the United States.

While money market mutual funds have no government deposit insurance, some do carry private deposit insurance.

Regulation of financial institutions seeks to protect the small saver because he or she may lack the financial expertise and access to quality information needed to correctly judge the true condition of a financial institution.

Credit union deposits are insured up to $100,000 by the FDIC.

The ____ permitted bank holding companies to acquire savings and loan associations and savings banks within each state and across state lines.

In the U.S. a bank that holds more than the required minimum amounts of capital is allowed to expand its services and service facilities with few or no regulatory restrictions.

According to the textbook the ultimate impact of regulation is to restrict the entry of new competitors, raise financial-service prices and reduce the likelihood of institutional failures.

The regulation of money creation has become a key objective of government activity in the financial sector.

Compared to branching holding companies are considered to be an expensive way for banking organizations to reach into new markets.

The ____ allowed national banks to set up branch offices throughout their home state if state law permitted state-chartered banks to do the same.

Using the the description or the definition below, identify each of the key terms and concepts. a. Agreement among central banking agencies in leading countries to regulate bank capital. b. U.S. law passed in 1930s to separate commercial from investment banking. c. Federal government agency established in 1934 in order to increase the confidence of the public in banks.

The law that prohibited savings and loans from purchasing junk bonds was the FDIC Improvement Act.

Tier Two capital for a bank, under the terms of the Basle Agreement includes all of the following items except one. What item is not included in Tier Two capital?

One major concern with the recent bailouts of large financial institutions (as well as other non-financial companies) is that they continue to take on excessive risks under the assumption that they will be bailed out again in the future.

The FDIC examines insured banks that are not members of the Federal Reserve System.

Tier One capital for a bank as defined under the terms of the Basle Agreement includes all of the following items except one. What item is not included in Tier One capital?

Bank holding companies in the United States can acquire finance companies and mortgage banking companies but not savings and loan associations.

Insurance companies are regulated primarily by the federal government and not the states.

Using the the description or the definition below, identify each of the key terms and concepts. a. Authorized a bail out of the savings and loan industry. b. Charters and supervises savings and loans. c. Supervises federal credit unions.